“This is a very positive development but needs to be put into context. This is a highly rated corporate with a better credit profile than our banks. And this is not an average Australian corporate.

For BBB land corporates, which represents the bulk of Australian industrial companies, the market is likely to be a lot more tenuous.

It is good to have that volume through the market, but is Australia’s premier corporate, and somebody that doesn’t issue very much and it was done in relatively good times [for issuing debt]. To extrapolate that into ‘the local bond market is open’ would be slightly optimistic.

There are a lot of people like us who are raising money into the US market, to swap back their plans [to Australia] they are going to have to get increased volume and credit margin.

Where the Australian bond market tends to operate OK is in good times. The test of how robust it is is when times are less good and when the name is less well known.”

Marlon Teperson, Centro Retail Australia

Photo: Penny Bradfield

Marlon Teperson, CFO, Centro Retail Australia

“Yes, it is a positive development. We are keen to see the domestic market growing in capacity and we are keen to see it as an alternative to the bank lending market in Australia. We want to be able to raise debt in Australian dollars. We are not rated, but we are certainly interested.

BHP has been able to raise five-year debt at a very good margin which makes the bond market competitive for other borrowers, even others who may not have the same credit rating as BHP as [this gives a good indication there is appetite from local investors].”

Kieran Pryke

Photo: Louie Douvis

Keiran Pryke, CFO, Australand

“It is an encouraging sign, but the Australian corporate bond market is a rated market and I don’t have an Australian rating, so it makes no difference to me. [Australand has issued on the US Private Placement market]

But when I was [CFO] of GPT Group, I was a prolific issuer in Australia. It was noted that it was the largest bond issue in Australia. I don’t doubt that, but I recall doing a $700 million issue at GPT about 10 years ago, so things don’t seem to have changed that much.”

David Michell, CEO, Finance and Treasury

David Michell, CEO, Finance & Treasury Association: ‘A vote of confidence in the Australian corporate bond market, but as someone put it to me, ‘not everyone can be ‘Brad Pitt’.’

Photo: Gabriele Charotte

Association

“You really need your number one stock to become your benchmark issuer. So just in terms of size, if you can get a billion dollar deal done, it sets a benchmark [for volume for other issuers].

We surveyed our members a few months ago on what determines where you will issue. Of 25 treasurers who responded, the [top three] reasons were: price, tenor and scale and depth of market.

The BHP Billiton deal is a vote of confidence in the Australian corporate bond market and it could represent a door opening for market. But as someone put it to me today, ‘not everyone can be Brad Pitt’. BHP is already a known name, that reduces a lot of the execution risk, similarly [the company] is a known risk. You can’t expect that just because someone can issue at 90 over swap, that you’ll be able to do the same.”